Norwegian banks are vulnerable to hacking and cyberattacks. More and more sophisticated attacks can pose a threat to financial stability, Norges Bank warns.
“A high degree of digitalization and interconnection makes the Norwegian financial system vulnerable. Financial institutions report more and more sophisticated attacks. An intensified threat picture increases cyber risk,” Norges Bank concludes in the report Financial Stability (Finansiell stabilitet) 2021.
In the annual report, Norges Bank looks at how robust the financial system is and how prone it is to disruptions. While all indications are that Norwegian banks are well equipped for traditional disruptions and crises – the pandemic, for example, did less damage than feared last autumn – Norges Bank now warns of an increased risk of digital attacks on actors in the financial system.
The central bank is now calling for tightening of cyber security to protect the Norwegian economy from unrest as a result of hacking and digital attacks on financial players.
The system is vulnerable
“Vulnerabilities in the financial system may increase unrest. In Norway, high household debt is the most important vulnerability. But the system is also vulnerable to cyberattacks, which are increasing in scope,” Deputy Governor Ida Wolden Bache points out in connection with the presentation of the report, where it appears that cyberattacks can have consequences not only for individual actors but for the entire financial system.
In addition, there is a need for broader cooperation between various authorities and actors in the financial system, the report states. In September, Norges Bank decided to introduce a framework for testing cyber security in the financial sector in collaboration with Finanstilsynet.
It will help strengthen cyber security in the financial sector and provide more knowledge about how cyberattacks can affect the financial system. Efforts will also be made to map how cyberattacks can threaten financial stability.
Less loss than feared
Last autumn, the central bank pointed out that the increase in the extent of infection in the country constituted a significant uncertainty for the banks. Now the conclusion is that the losses for the banks were less than feared, that the reopening of society has given a marked upswing in the Norwegian economy, and that activity is higher than before the corona pandemic.
“One of the main conclusions is that the financial system has done well during the corona pandemic,” Bache emphasized.
High household debt – which Norges Bank states as the biggest threat to financial stability – makes households vulnerable to loss of income, higher lending rates, and falling house prices.
There is still uncertainty about the further development of the pandemic. An infection boom could dampen the upswing in the economy, and a sudden increase in interest rates and risk premiums globally could cause disturbances that propagate in the Norwegian financial system.
Source: © NTB Scanpix / #Norway Today / #NorwayTodayFinance
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